CALGARY — The Alberta government welcomed a decision Tuesday by Nebraska’s governor to approve a revised route for the Keystone XL oil pipeline, but opponents and analysts say the megaproject still has several hurdles to clear before getting a green light from the Obama administration.

Nebraska Gov. Dave Heineman’s endorsement clears the way for a final decision from the U.S. government that could allow Calgary-based TransCanada Corp. to transport Alberta oil from Hardisty to terminals in Steele City, Neb.

The new route avoids Nebraska’s Sand Hills, an environmentally sensitive region overlaying the Ogallala aquifer, the state’s main source of groundwater.

The line will still cross the aquifer, though in a less sensitive area, according to a letter Heineman sent to President Barack Obama and Secretary of State Hillary Clinton informing them of his decision.

“Keystone would have minimal environmental impacts in Nebraska,” the governor stated. “The concerns of Nebraskans have had a major influence on the pipeline route, the mitigation commitments and this evaluation.”

Both the provincial and federal governments have backed the project to help increase bitumen exports to the U.S. and ease the deep discount for oilsands that has recently wreaked havoc on Alberta’s finances.

Premier Alison Redford said in a statement she is pleased Nebraska’s governor concluded the project’s environmental concerns were minimal “and that a pipeline carrying oilsands crude should not be treated differently than any other crude.”

At the legislature, Alberta Energy Minister Ken Hughes told reporters the decision on Keystone’s routing is a “big step forward.”

“It’s one step, but an important step,” he said. “The president will be getting advice — probably conflicting advice — from different parts of the American political infrastructure, but this is really important.”

Federal Energy Minister Joe Oliver also issued a brief statement, calling Tuesday’s development a positive move that will create jobs on both sides of the border. “Our desire is to work with the Obama administration in achieving final approval,” he said.

TransCanada’s original permit request to build the pipeline was delayed and ultimately rejected last year by the State Department after Nebraska officials criticized the project’s route.

U.S. State Department spokeswoman Victoria Nuland said Tuesday that Heineman’s letter would be taken into consideration in the review process, with a decision expected sometime after March.

The 1,897-kilometre pipeline would link up with another $2.3-billion conduit line to Texas refineries, which is expected to be in service later this year. The smaller segment does not require a federal permit.

TransCanada expects the Alberta-to-Nebraska line to start up in late 2014 or early 2015, despite the U.S. State Department delay.

“I’m still optimistic that this thing can be done in a relatively short period of time,” TransCanada CEO Russ Girling told reporters Tuesday. “All of the work’s been done.”

Construction can begin within weeks of State Department approval, he said, and about 9,000 people are eager to start working on the project. “These people want these jobs and our job is to try to get this done as quickly as we can,” Girling added.

But the pipeline’s final route is only one issue that has fuelled fierce opposition to the energy development. Environmental groups have blasted the project for spurring further exploitation of the carbon-intensive oilsands, which they contend will dramatically increase greenhouse gas emissions.

Mike Hudema of Greenpeace Canada said residents along the pipeline’s path and environmental activists aren’t ready to give up the fight, despite Tuesday’s “disappointing but not unexpected” decision by Nebraska.

He noted Obama had strong words on the need for action on climate change during his inauguration speech Monday.

“Keystone still has a long road ahead of it before it ever gets approval,” said Hudema. “You’re definitely going to see more and more active opposition to this pipeline.”

University of Alberta energy economist Richard Dixon said Keystone XL still faces an “uphill battle with the environmental community” and the project must obtain general public support.

“Given what the president said in his inauguration speech, it’s still a rocky road for Keystone,” Dixon said.

However, the letter by Nebraska’s governor is significant because without his support, “it could have been a show-stopper for the route.”

The development comes as Alberta is ramping up bitumen development — production is expected to hit 3.2 million barrels a day by 2020 — and the industry needs new infrastructure to move product to market.

In recent weeks, Alberta bitumen has been selling at a steep discount and Finance Minister Doug Horner says the price differential will cost the treasury billions of dollars this year.

Both the province and federal governments have made increased export capacity and finding new customers for Canadian oil a priority.

Wildrose Leader Danielle Smith said approval of Keystone won’t solve Alberta’s current financial dilemma, although it would be a major piece of the puzzle. She said the province must make its case to American regulators and suggested Redford should personally lobby for the project.

“She’s the person to advance this through to the finish now,” said Smith. “I think there’s good reason for her to intervene at this point.”

With files from Darcy Henton, Calgary Herald, Bloomberg and The Canadian Press

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